We are all serfs if we aren’t part of the 0.01%:
He was screaming in his daughter‘s face about the Block family legacy: “Do you want to be high class or low class? You’re a Block, you’re one of us! You have to learn how to lead!” She was shaking and saying that she didn’t want to. …
Data on how we’re all serfs (even 99-99.9%):
Here’s your proof (graphic from article):
The flattening out of the bottom 3 lines coincides with the Bush Tax Cuts, FWIW.
Plum Line: You can look at the 1980s as the beginning of a debate in which we were told that unshackling the economy through deregulation and tax cuts would benefit everyone. Yet what we saw was a kind of triumph of the super-rich that was much more dramatic than anyone expected.
Zucman: The United States has run an unprecedented social experiment since the 1980s — slashing the tax rate, deregulating finance and labor markets, cutting the minimum wage, and so on. Almost 40 years after the start of this experiment, we have the data to judge whether this experiment was successful or not.
What we are seeing is that for the bottom 50 percent of the income distribution, their average income was $16,000 a year per adult in 1980, adjusted for inflation. And it’s still $16,000 a year per adult today. The bottom half of the income distribution, on a pre-tax and -transfer basis, has had zero growth for more than a generation. What’s the lesson that we can draw from this experiment, and how can we do better?
Plum Line: Very powerful interests believe that this experiment was a smashing success.
For a while now there’s been a thought in my head how historically we (we being people in Western democracies) are repeating a time worn pattern of increasing income inequality while elites entrench themselves in power. A recent book called Mortal Republic explores the fall of the Roman Republic. Here’s an interview with the author that highlights parallels with our current situation (here and in Europe imo.)
Edward Watts
I think that we’re in the early stages of a process that could lead to that. The point at which Romans were willing to make that trade occurred after almost 150 years of political dysfunction, but it also occurred after a generation of really brutal civil war.
And the process that started that was one of economic inequality and the inability and unwillingness of the people vested in the upper, successful parts of the Roman state to address that economic inequality.
But as people’s needs were not being addressed for decades, the tensions heightened to the point where violence started breaking out. And once violence starts to break out, it’s very difficult for a republic to regain control of itself.
It’s easy to see how the US and other established republics could be in the beginning states of a similar process. I don’t think we’re there quite yet, but there are reasons for genuine concern
While I agree inequality is a problem (and in general more so in the US than in Europe, although Europe is not that far behind) I have come to believe I come inequality has become a red herring (an important issue, but not the driver of the inequality we are seeing), and the issue itself is not income, but wealth inequality.
The US and Europe do not do too badly in income inequality (Gini of about 0.3 give or take, although it slowly slides up) but wealth inequality is truly outrageous (US has a Gini of over 0.8, one of the five highest in the world and basically Gilded age level. Denmark is truly bad too, and the rest of developed countries rank from bad to moderately bad).
Which means the solution should go towards taxing wealth, more than taxing high income (taxing rent/investment income from wealth would work too).
But yes, I agree we are falling back in a pattern we avoided for the late part of the XX century to great benefit of all.
That’s a really good point. What’s up with Denmark? That’s surprising given that I’ve heard they have high taxes (and how often they’re cited as a good social democratic model by US progressives.)
Here’s a Wiki reference for two proposals meant to address wealth inequality in the US.
Proposals to reduce wealth inequality[edit]
Taxation of wealth[edit]
Senator Elizabeth Warren proposed an annual tax on wealth in January 2019, specifically a 2% tax for wealth over $50 million and another 1% surcharge on wealth over $1 billion. Wealth is defined as including all asset classes, including financial assets and real estate. Economists Emmanuel Saez and Gabriel Zucman estimated that about 75,000 households (less than 0.1%) would pay the tax. The tax would raise around $2.75 trillion over 10 years, roughly 1% GDP on average per year. This would raise the total tax burden for those subject to the wealth tax from 3.2% of their wealth under current law to about 4.3% on average, versus the 7.2% for the bottom 99% families.[77] For scale, the federal budget deficit in 2018 was 3.9% GDP and is expected to rise towards 5% GDP over the next decade.[78]The plan received both praise and criticism. Two billionaires, Michael Bloomberg and Howard Schultz, criticized the proposal as “unconstitutional” and “ridiculous,” respectively. Warren was not surprised by this reaction, stating: “Another billionaire who thinks that billionaires shouldn’t pay more in taxes.”[79] Economist Paul Krugman wrote in January 2019 that polls indicate the idea of taxing the rich more is very popular.[80]
Limit or tax stock buybacks[edit]
Senators Charles Schumer and Bernie Sanders advocated limiting stock buybacks in January 2019. They explained that from 2008-2017, 466 of the S&P 500 companies spent $4 trillion on stock buybacks, about 50% of profits, with another 40% going to dividends. During 2018 alone, a record $1 trillion was spent on buybacks. Stock buybacks shift wealth upwards, because the top 1% own about 40% of shares and the top 10% own about 85%. Further, corporations directing profits to shareholders are not reinvesting the money in the firm or paying workers more. They wrote: “If corporations continue to purchase their own stock at this rate, income disparities will continue to grow, productivity will suffer, the long-term strength of companies will diminish — and the American worker will fall further behind.” Their proposed legislation would prohibit buybacks unless the corporation has taken other steps first, such as paying workers more, providing more benefits such as healthcare and pensions, and investing in the community. To prevent corporations from shifting from buybacks to dividends, they proposed limiting dividends, perhaps by taking action through the tax code.[81]
The stock buybacks thing isn’t a good solution in my mind. While it is true a lot of the biggest shareholders in the country are benefiting the most from the buybacks, the divedends are shared with all shareholders, including your regular folks with investment portfolios. You don’t have to be rich to buy stocks. The rich just happen to buy more. This just seems like a less focused version of Warren’s plan, and focuses on regulation of companies. This could be argued as something that could slow down business growth.
Elizabeth Warren’s plan is basically impossible to argue with in good faith. We are talking about an extremely marginal increase in the tax burden for 75k households in the U.S. This won’t kill innovation, limit jobs, or harm corporate interests. This is focused on people, not companies, and would be a very easy way to help pay for programs combatting health care issues and climate change with 0 impact for 99.9% of the U.S. population.
I really don’t think she will win the nomination, but out of all of the wealth tax ideas, I like hers the most. AOC’s is all about income, which I don’t think works as well, because you can get around it. Wealth tax is more difficult to get around.
One thing to keep in mind, when talking about things like “taxing wealth”, is that I suspect the very wealthy are gonna be REALLY damn good at sheltering that wealth, so you likely aren’t going to get anywhere close to the projected revenues from such plans.
The one thing I do like about Warren’s proposal is the Citizenship Exit tax. IMHO, this is actually a loophole which allows the wealthy to benefit from US taxpayer subsidized wealth gains, and not pitch in afterwards.
I’m also ok with a high-ceilinged Estate Tax as a wealth transfer tax, but not with a Wealth tax overall.
Other than that, I don’t think taxing assets which have already been taxed is an appropriate methodology. I’m far more in favor of a correction of the tax cuts which have mostly benefited the 0.1% the most. 40 years of that tax policy has left us with more of an oligarchy than a representative democracy, and I can make a very good argument that it is undermining the country in a LOT of unanticipated ways, but mostly they all come down to the law not applying to and/or becoming subservient to money, and the oligarch class knowing this.
There is a point you can overtax the rich. Even though it’s been misused for the past 40 years, the original idea behind the Laffer curve is real, though it takes 75-80% tax rates for it to start.
Some form of restorative justice has to happen to combat the effects of income inequality and globalization (which went hand in hand). Figuring out how to do this in a global economy is the hard part.
As has been mentioned before, many people get taxed on the same asset (our home) every year. It’s not appropriate to tax assets begs the question.
I can see the rationalization that property taxes are a payment for services, but I do see your point.
All taxes are.
Say the money from taxing super rich fuck assets can only be used for defense or something.
They can’t pretend that defense isn’t a service they take advantage of.
All taxes to government are to fund the primary mission of government, which is to defend (and maybe slightly enhance) the status quo. The more relative wealth and status someone has in the status quo, the more they benefit from that service. The rich should pay more, and currently aren’t paying their fair share.
If done properly, a federal tax on assets would also be and is also a payment for services. The Federal Government does provide services. The problem is, it’s very easy to become asset rich and money poor, and I don’t mean in the the rich hides their money so they don’t get taxed sort of way… more like, I’ve had my home for years; I’m on a fixed income now that I am older and it’s not liquid.
I feel like Warren’s approach is more like an excess wealth tax, and for an average house in area, outside the destroy the suburbs crowd approach, it’s not really excess. You don’t want to tax people to death because they own a modest home.
Is there another country which already has this sort of wealth tax, that we can look at as an example of it in action?
Good question, and yes!
Current examples
- Argentina: It is named Impuesto a los Bienes Personales, on assets above ARS 800,000 (approx. US$48,000), the annual rates are 0.75% for 2016, 0.50% for 2017, 0.25% in 2018, and they raise it in 2019 to 0.75%.
- Canada: British Columbia has recently implemented a tax on personal homes. The tax is in addition to regular property tax and begins at homes worth more than $3 million Canadian (approx. US$2,300,000). The tax is 0.2% on the first million above the $3 million and 0.4% on any value above that. No recognition of mortgages, lien, or taxes due is taken into account.
- France: Until 2017, there was a solidarity tax on wealth on any net assets above €800,000 for those with total net worth of €1,300,000 or more. Marginal rates ranged from 0.5% to 1.5%.[4] In 2007, it collected €4.07 billion, accounting for 1.4% of total revenue.[5] From 2018 onwards, it has been replaced by a wealth tax on real estate, exonerating all financial assets.[6]
- Spain: There is a tax called Patrimonio . The tax rate is progressive, from 0.2 to 3.75% of net assets above the threshold of €700,000 after €300,000 primary residence allowance.[7] The exact amount varies between provinces.
- Netherlands: There is a tax called vermogensrendementheffing . Although its name ( wealth yield tax ) suggests that it is a tax on the yield of wealth, it qualifies as a wealth tax, since the actual yield (whether positive or negative) is not taken into account in its calculation. Up to and including 2016, the rate was fixed at 1.2% (30% taxation over an assumed yield of 4%). From the fiscal year of 2017 onwards, the tax rate progresses with wealth. See Income tax in the Netherlands. In addition to the vermogensrendementheffing , owners of real estate pay a tax called onroerendezaakbelasting , which is based on the estimated value of the real estate they own. This is a local tax, levied by the city council where the property is located.
- Norway: 0.7% (municipal) and 0.15% (national) a total of 0.85% levied on net assets exceeding 1,480,000 kr (approx. US$200,000) as of 2017.[8] For tax purposes, the value of real estate assets are estimated to approximately 50% of the market value (25% if it is the taxpayer’s primary residence).[9] The Conservative and Progress parties in the current government and the Liberal Party have stated that they aim to reduce and eventually eliminate the wealth tax.[10]
- Switzerland: A progressive wealth tax that varies by residence location. Most cantons have no wealth tax for individual net worth less than CHF 100,000 (approx. US$102,000) and progressively raise the tax rate on net assets with a top rate ranging from 0.13% to 0.94% depending on canton and municipality of residence.[11] Wealth tax is levied against worldwide assets of Swiss residents, but it is not levied against assets in Switzerland held by non-residents.[11][12]
- Italy: Two wealth taxes are imposed. One, IVIE, is a 0.76% tax imposed on real assets held outside Italy. The values of such assets are determined by purchase price or current market value. Property taxes paid in the country where the real estate exists can offset IVIE. Another tax, IVAFE, is 0.15% and is levied on all financial assets located outside the country, including, so far as the language seems to imply, individual pension schemes such as 401(k)s and IRAs in the US.[13]
I may be mistaken, but just a few posts above yours, it details Warren’s plan, and it is in no way anywhere close to a tax on a ‘modest home’.
That’s it. I see no problem with this at all. You’ve exploited the system to make you wealthy enough to spend at least a million dollars a year for the next fifty years without making any more money? How about you help make sure the least of us can just put food on the table, m’kay?
On a side note, I’ve never understood why people say Capitalism is an ‘efficient’ system for getting things done. It always seemed to me that companies and people getting absurdly wealthy like this (and the cash reserves of Google, Apple, etc) represent an incredible inefficiency. I’m just not self-centred enough to understand, I guess.
You are correct. I am not criticizing Warren’s approach at the moment. She seems conscious of that line. I am not sure everyone in tax the wealth space actually is. We just want to avoid punishing people who save for retirement like they were told to do, and a fair amount of that can wind up in the equity of a house, or a condo and/or land they’ve been paying on for years. We were talking about property taxes so… well anyone who owns property probably knows a bit about that.
Yeah, that I can dig. Not that I own property, or ever will in the Seattle Market, heh.